Monday, February 22, 2010

New Home Purchase

I put in an offer on a new home today and it was actually a brand new construction from Lennar. I never really thought I would ever buy a new home, especially in this economy with so many foreclosures on the market, but the deal I got was unbelievable.

I falsely assumed that all the good deals would be foreclosures or short sale. The reality is that new construction homes in Texas are very competitive against used homes and even some foreclosed homes. I actually will be paying less in the long run for a 3,282sq/ft home, 4 bedroom, 3.5 bathroom ,lime stone, home then a similar one currently listed on the market today, after you include the costing cost, repairs and all the appliances that I would have to get.

The builder is paying all my closing costs and buying down my interest rate to 4.25%! I basically just come to closing with my down payment. I also negotiated $30K off the list price, with a new Washer and Dryer. The house already had a new fridge, stove, microwave, garbage disposal, garage door opener, granite counter tops and sprinkler system. And I did all this without a Real Estate Agent!

Real Estate Agents will tell you that you need them to "look out" for you and that the sellers are only interested in themselves. In reality, the agents are looking out for themselves and to take a 3% cut of your sale for doing very little.

After this purchase, it will be my 4th house that I have purchased by myself with no agent other then the seller's agent working with me. I can honestly say that I have never had a bad experience doing it myself and have saved more money this way then using an Agent.

Reasons to be buying now: I basically decided that now was the right time to be buying a house. Here are a few of my key reasons.

- After March 2010 the Federal Reserve will stop buying Mortgage back securities from Fannie Mae and Freddie Mac. Basically the government has been buying up 90% of all loans for the past 1.5 years. After March interest rates will go up, unless they extend this program. I estimate that rates will go from 5% to at least 6.5%

- After April 2010, the $6.5K-$8k tax credit will be gone. Basically the government is giving away free money if you buy a house by April 2010. Even if you don't pay taxes, you will get this "credit"...

- Seasonality - basically the winter is the slowest time of the year for home sales. Buying at this time, is when less people are buying giving sellers more motivation to sell and to discount prices.

- Builders are desperate to sell there inventory and will pay all your closing costs and even buy down your interest rate. I am getting a 4.25% rate and they are paying over $11K in costs on top of a $30K discount to the list price!

No comments: